The U.S. economy sprouted 517,000 jobs last month, the labor department reported, almost double December’s 260,000 and nearly three times the 185,000 consensus forecast among analysts polled by Dow Jones.
November’s number was revised from 256,000 new jobs to 290,000; December’s was adjusted from 223,000 to 290,000. The revisions indicate the jobs market and economy, in general, have more momentum than previously thought.
January posted the largest monthly gain since last July and lifted the total number of jobs added in the past three months to 356,000, double the pre-COVID average of 189,000, The Wall Street Journal said.
The leap in employment ended a five-month slide in the number of new jobs added.
The unemployment rate ticked down to 3.4 percent, its lowest since at least May 1969.
Employers advertised 11 million open jobs at the end of 2022, about twice the number of jobless people actively looking for work, according to the labor department.
On 2 February, the number of first-time applications for unemployment benefits was the lowest since April 2022.
Bars, hotels, restaurants, and other leisure venues led January’s job surge, adding 128,000 jobs as the economy’s service sector boomed after a contraction in December. The sector averaged 89,000 new jobs monthly in 2022.
Professional and business services added 82,000 spots, government put back 74,000 employees, and health care took on 58,000 new workers.
January saw 30,000 new workers in retail. Manufacturing added 19,000.
The building industry hired 25,000, led by 16,500 slots in nonresidential, private-sector construction. Home builders fielded 5,400 new workers.
“I’m astonished by the strength of the nonresidential construction labor market,” Anirban Basu, chief economist for Associated Builders and Contractors, told the WSJ.
“With interest rates rising so profoundly last year, one would have expected the segment to have softened by now,” he added. “Instead, many contractors report operating at capacity.”
The motor vehicle and parts industry laid off 6,500 workers, information businesses dumped 5,000 employees—not counting mass layoffs by Big Tech—and utilities cut 700 jobs.
Despite the dazzling rate of hiring, wages edged up only 1 percent in last year’s fourth quarter, as we report in “Wage Growth Slows to 1 Percent in 2022’s Final Quarter” in this issue.
Some analysts argued that the combination of a strong job market and scant wage growth boosts the chance that the U.S. Federal Reserve will continue with minimal interest rate increases in the months ahead or even hold rates where they are.
Others contended that strong job growth and virtual record-low unemployment could easily overheat the economy, pushing the Fed to keep rates higher longer or even continue to raise them by larger increments.
“It dampens expectations that they [Fed officials] are going to cut rates in the second half of the year,” chief economist Kathy Bostjancic at Nationwide said to the WSJ.
In either case, January’s jobs report “is almost too good to be true,” Julia Pollak, chief economist at ZipRecruiter, wrote on the employment service’s website. “Like $20 bills on the sidewalk and free lunches, falling inflation paired with falling unemployment is the stuff of economics fiction.”
TRENDPOST: The shocking number of jobs brought on in January distracts from evidence of economic decline: U.S. GDP expanded by only 1 percent in last year’s final quarter, consumer spending slumped during the period, and manufacturing declined.
With the jobs market and the travel industry buzzing, inflation and interest rates still rising, and signs of widespread weakness, the economy’s short-term fate is anyone’s guess.
Given persistent signs of U.S. and global economic sluggishness, in the longer term we still expect the U.S. to enter a recession in the last half of this year, dragged down by contractions beginning earlier elsewhere in the world.
And as for the high number of job gains, as illustrated by the data in our Economic Update of this Trends Journal, they are fictional.